Treasuries rose, snapping a five-day losing streak, and the dollar strengthened on concern the global economic recovery is flagging. Wheat and rice advanced, while Brent crude increased for the first time in three days.
The gain in the 10-year Treasury drove the yield three basis points lower to 3.15 percent at 8:30 a.m. in New York on the first day of trading this week. The Dollar Index climbed 0.3 percent, while the Swiss franc appreciated 0.8 percent against the euro. Brent rallied 0.8 percent, wheat jumped 3.5 percent and rice increased 1.8 percent. The Stoxx Europe 600 Index added 0.1 percent, while futures on the Standard & Poor’s 500 Index slipped 0.2 percent.
European services and manufacturing growth were revised lower, with a composite index falling to 53.3, from an earlier reading of 53.6, London-based Markit Economics said today. The Reserve Bank of Australia kept its benchmark interest rate unchanged, saying the nation’s growth pace may be weaker than previously forecast. China still faces “large” inflationary pressure and the central bank will maintain a “prudent” monetary policy, the People’s Bank of China said yesterday.
“There are still a lot of concerns in the global economy,” Stephen Halmarick, the Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion, said in a Bloomberg Television interview. “People are still fairly cautious.”
Factory Orders
The five-year Treasury yield declined three basis points, and the two-year yield fell two basis points. A Commerce Department report today may show orders placed with factories rebounded 1 percent in May after falling in April by the most in almost a year. The drop in index futures indicated the S&P 500 may fall after its biggest weekly rally in almost two years.
The dollar appreciated 0.5 percent versus the euro to $1.4468, while the franc strengthened against all of its 16 major counterparts monitored by Bloomberg. The Australian currency depreciated 0.3 percent versus the dollar. The pound gained 0.7 percent versus the euro after a report showed a gauge of U.K. services growth for June exceeded economists’ forecasts.
The yield on the Greek two-year note jumped 77 basis points, snapping a five-day decline, while the German two-year yield fell three basis points. The Greek 10-year yield rose six basis points, driving the difference with bunds six basis points wider to 1,349 basis points. The cost of insuring Greek debt jumped 33 basis points to 1,911, according to CMA.
Italy
The Italian 10-yield increased seven basis points after the cancellation of a news conference today in which Finance Minister Giulio Tremonti and other ministers were due to detail the government’s planned 47 billion euros ($68 billion) in new austerity measures. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments climbed five basis points to 227.
Europe’s Stoxx 600 gained for a seventh day. Celesio AG, Europe’s largest drug wholesaler, climbed 4.5 percent after analysts at CA Cheuvreux and WestLB AG raised their recommendations on the stock. CSM NV slumped 8.2 percent after the world’s biggest maker of bakery ingredients forecast declining earnings.
The MSCI Emerging Markets Index slipped 0.1 percent, following a five-day advance. Bank of Communications Co. sank 0.7 percent and Industrial & Commercial Bank of China Ltd. slipped 0.5 percent in Hong Kong after Moody’s Investors Service said non-performing loans in China may rise to as high as 12 percent of total credit. Default swaps on Chinese government debt climbed four basis points to 84, the biggest increase in more than a week.
Vietnam, Hungary
The Shanghai Composite Index climbed 0.1 percent as China’s Premier Wen Jiabao said inflationary pressures are under control. Vietnam’s VN Index rallied 1.3 percent, the most in two weeks, after the central bank cut borrowing costs for the first time since October.
Mol Nyrt., Hungary’s largest refiner, sank 3.4 percent to the lowest level since Dec. 21, sending the benchmark BUX Index to a 0.7 percent drop, on reports that Croatia asked for the extradition of Chairman Zsolt Hernadi over alleged bribery charges. Turkey’s lira slid 0.6 percent versus the dollar after the central bank said the inflation outlook was “positive.”
Brent crude added 90 cents to $112.29 a barrel in London and oil in New York advanced 0.8 percent to $95.70. Wheat futures in Chicago climbed for the first day in three and rice gained for a third consecutive day. Thailand, the biggest rice exporter, will buy the grain from farmers under a program of the incoming government.
To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net.
To contact the editor responsible for this story: Paul Sillitoe at psillitoe@bloomberg.net
